Beyond national economy-wide rebound effects: an applied general equilibrium analysis incorporating international spillover effects

Existing research on the phenomenon of economy-wide rebound effects from increased energy efficiency have identified the importance of trade effects determining the nature and magnitude of economywide rebound effects in national economies where efficiency improvements have occurred (e.g. Hanley et al., 2009; Van den Bergh, 2011). However, the issue of potential spillover effects on energy demand (and supply) from energy efficiency improvements in one region/nation on others have generally been neglected (Madlener and Alcott, 2009; Sorrell, 2009; Turner, 2013; Van den Bergh, 2011). This paper considers how the concept and consideration of economy-wide or 'macro-level' rebound may be extended to consider the impacts of increased energy efficiency in one country on energy use in others. While basic theoretical contributions on the issue of ‘global rebound’ have been made (e.g. Wei, 2010) and some applied studies have been conducted (e.g. Barker et al., 2009), there exist no applied macro-level rebound studies to date that attempt to fully consider and identify the types of channels through which energy efficiency increases in one region/nation may impact energy demand and supply conditions in others. This is an important knowledge gap, particularly given the global nature of energy-related climate change and the context of supra-national policy targets such as the EU 20-20-20 framework. The potential for energy efficiency policy actions taken in one country to impact energy use (and related emissions) in others implies that target setting and implementation decisions in different member states may not be regarded as independent.